How to Budget for Your Passions

1. Look at your current spending. List out your fixed expenses, things like rent or mortgage, utilities, transportation, and groceries. Then, list your discretionary expenses like clothing, going out, and subscriptions.
2. Be smart about saving and make sure it's part of your plan. Whatever your age, saving for retirement needs to be part of your financial plan. The earlier you start, the less you'll likely have to save each year. One way to do it is to contribute to a 401(k) or other company sponsored retirement plan, especially if your company plan offers an employer match.  The contribution will come out of your paycheck automatically before you have a chance to spend it on anything else. You'll be saving for the future and possibly getting additional savings from your employer if they offer a match. If you don't have a company sponsored retirement plan, you may want to consider opening an IRA account and set up automatic transfers from your checking account. It's an easy way to save money for your future.
3. Do you have enough in your emergency fund? You never know when you might need extra money. It could be a major event like job loss or illness, or it could be an unexpected car repair. If you don't have enough cash to cover three-to-six months of essential expenses, consider saving toward that now.
4. Pay down high-interest credit-card debt. It's important to stop the clock on high interest debt as fast as you can because credit card debt can just keep spiraling higher every month.
5. Is there anything left over for your passions? If not, review your discretionary spending and look closely at where your money is going. Can you carve out more money to save for your passions? Commit to making changes so that the way you spend money brings you joy, significance, and meaning.

Deciding what you need to do is the easy part. Doing it is going to take a bit more effort.

To help you decide where and how to make changes, try tracking your spending for a month or two, highlighting the things that bring you joy—and those that don't. Look at your bank and credit card statements line by line. Your credit card statement may automatically categorize your spending. Or use a tracking program. Once you start paying close attention, you can better decide where you want to keep spending and how you might want to redirect your money.

Look for practical changes you can make now, so you have more money to put toward your passions. For instance, can you reduce fixed expenses by downsizing or moving to a less expensive neighborhood? What about shopping at less expensive stores? Focus on money you spend mindlessly for things like streaming subscriptions, takeout, or ride services—you name it. It's easy to rack up all kinds of expenses and not even be aware of how much it costs per month.

Once you've pinpointed the things you spend on that aren't important to you, it will be easier to redirect that money toward the things that make you happy. It's not giving something up. It's making something else possible.

If your budget is so tight, there's nothing to redirect, consider a side hustle. My friend drove for a food delivery service until she paid off her debts. She liked it so much she kept doing it and now has extra money for other passions.

Having concrete goals is a good way to focus your spending on your passions. But goals are only as good as your ability to reach them. To help you do that, make sure they are:

• Specific: Clearly decide what you want. Write your goals down, including the time and money it will take to reach them.
• Measurable: Have a way to measure your progress—weekly, monthly, or annually.
• Achievable: Dream but also be realistic.
• Relevant: Go back to your values and make sure your goals align with them.
• Time-bound: "Someday" isn't good enough. Give yourself a deadline.

Once you've set your goals, automate as much as you can. Consider opening a separate savings account for your passion—like a separate savings account for travel. Set up automatic deposits to this account. Think of it as automatically funding your passion.

Redirecting your money toward your passions is about having a spending plan with purpose. But good money management includes having a savings plan as well. So, as you realign your budget with your values, don't short-change your retirement savings. Consider contributing to your 401(k) to get the company match, or opening and funding an IRA to save for retirement.

Passion budgeting takes careful planning and discipline, but it's worth it. Eventually you'll get to spend on what matters to you most. And you deserve it.

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